EUROPEAN UNIVERSITY INSTITUTE Department of Economics
320
ËUI
E U I W O R K I N G P A P E R No.84/121 INTERNATIONAL AND TRANSNATIONAL
FINANCIAL RELATIONS by
Marcello de Cecco
A paper presented at a Conference on the Transformation of the In ternational System organised by EURAL in Buenos Aires in October, 1984.
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All rights reserved No part of this paper may be reproduced in any form without
permission of the author.
(C) Marcello de Cecco
Printed in Italy in November 1984 European University Institute
Badia Fiesolana 50016 San Domenico (Fi)
Italy
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INTERNATIONAL AND TRANSNATIONAL FINANCIAL RELATIONS
1. My generation, and the one or two generations preceding mine, were brought up in a world of international relations. A world, that
is to say, where the State had acquired a monopoly of foreign rela tions. The monopoly of course was not a complete one. Transnational relations went on all the time, but the world I am referring to was used to considering as a natural state of affairs a pyramid of power at the top of which stood the State. Transnational relations took place but were subject to the approval or were even planned by the State at government or specialized agency level.
Still, if we lengthen our historical perspective somewhat, we can immediately see that this pyramid of power which culminated with the State, had not been the normal state of affairs for more than one century. Scholars with a more developed sense of history knew this very well. However, they thought that an irreversible process had been set in motion, and that the monopoly of the state over foreign relations would inevitably increase as time pressed. The drive to internationalize transnational relations was considered irreversible.
The decades which have followed the Second World War have wit nessed, however, the opposite phenomenon. The drive to international ization has been, at least for what concerns the large industrial countries, firmly reversed and an opposite process of transnational ization has started again. It has proceeded unabated for more than three decades. It has been so strong that a generation younger than mine has come to consider it as irreversible as we had considered in
ternationalization.
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The events of the last five years, however, have made this pros pect much less certain. I think that we are at a cross-road. We can expect, for the next decade, a reassertion of international relations and we can, equally reaonably, expect a renewed process of transna tionalization. I favour the first outcome as the most likely, and I will do my best to explain why I think so focussing on the subject I know best, which is international banking.
First of all, however, I will describe the transnationalization of world banking which has occurred since the nineteen sixties, and which has involved, more and more heavily, the main banks of the large
industrial countries.
As I have said before, the 60 years preceding the Second World War had seen the opposite process take wing. Banks had been asked, induced, even urged, by States to organize a network of foreign ope rations. The history of foreign banking in Italy since the unifi cation of the country in 1860 is an extremely good example. French banks, and in particular the Credit Mobilier, had been asked by the French Government, also at the insistence of the Italian Government, to start operations in Italy. This happened in the 1860s and 1870s. After the crash of the Italian banking system in the 1880s, the Ita lian Government asked the German Government to persuade the large German banks to start operations in Italy, which happened in the 1890s. German large banks and the Deutsche Bank in particular, had been created by the Imperial Reich anyway, set up with the declaredly mercantilistic objective of furthering German trade and German power.
The drive to make banks an important instrument of foreign policy was so powerful in the decades before the First World War, that it
involved even Britain. Britain had been a very remarkable case of
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-transnationalism, with the power of the city of London being much greater than that of the State.
British financial institutions, especially the most traditional ones, the merchant banks and the Bank of England, had identified their private gains with the interests of the British nation at large. They had pushed for free trade and free international financial relations even when the best interest of Britain would have required something radically different.
However, as the European powers, and the German Reich in parti cular, had started to entertain global policy objectives in the two decades before the First World War, British bankers had begun to experience heavier pressure to help her Majesty's Government in the enforcement of its foreign policy objectives. Their faith in trans nationalism was so strong, however, that only in a few cases the
Government had been able to persuade them to become an economic arm of British foreign policy. To this day, I may add, the transnational ization of British banks has remained unabashed and the precipitous decline of the British economy can be, and has been, attributed to the continuous capacity, on the part of the British financial institu tions, to impose on the Government their view, that in a nutshell consists in thinking that banking serves the purpose of sending money wherever in the world there is the most profitable chance of investing it. And that British national interest can only coincide with the profit maximizing activities of the city of London.
After the First World War, the two inter-war decades have wit nessed the strongest affirmation of the international model of foreign relations that the world has ever experienced. The monopoly of the State over foreign relations has been extended to include, for the first time, all sorts of fields which would have never occurred to a
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-statesman like Bismarck to include. This has meant that financial relations and foreign banking operations were subjected to State supervision in order to make them more and more an instrument of the foreign policy objectives of the State. This was a direct consequence of the economic facets of the concept of total war, a concept that emerged and was practised on a large scale only during the First World War.
A partial exception to this tendency was represented by the
drive to establish foreign operations experienced in the first half of this period by large American banks. Because of the peculiar distri bution of power in American society, this drive can be seen as an experiment in transnationalism. But it could equally well be seen as another case of the prevalence of the international model of foreign relations in the inter-war period. I think both models apply in this case - U.S. banks had genuine profit-maximization in mind when they sought to establish foreign operations. They would have done it even in the face of the Government. But it was also the case that the U.S. Government had a continuous strategy to wrest the primacy in foreign relations away from Britain and recognized the importance of the foreign operations of U.S. banks to accomplish this strategy.
In the event, however, the transnational model can be said to have prevailed in the twenties with American banks overstretching
themselves in foreign operations and in sovereign lending in parti cular, and then withdrawing from foreign lending to speculate on Wall Street or to lend to Wall Street speculators at the end of the decade. This sudden withdrawal from foreign lending cannot in any way be
considered an act of foreign policy conceived by the U.S. Government. It occurred in the pursuit of profit maximization and it had conse quences which in no way can be said to have been beneficial to the exercise of foreign policy on the part of the United States.
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-The crisis of 1929 and the European banking panic of 1931, followed by the U.S. panics of 1932 and 1933 were a direct result of the prevalence of unfettered transnationalism on the part of U.S. banks.
Transnationalism, by definition, must be the pursuit of a micro goal, either economic or political, by a non-State political-economic agent in the world arena. American banks when they lent greater and greater sums abroad and floated an avalanche of foreign bonds on the U.S. market had mostly their balance sheets and their market share in mind. The same goals motivated them when they abruptly retracted from the world market at the end of the twenties. There just was more money to be made lending to Wall Street brokers than to German cities or Latin American Governments.
The transnational behaviour of American banks in the twenties can be said to have made the move to a completely international model of foreign relations more inevitable in the 1930s for the world as a whole, including the United States. More than that, they can be said
to have done more than any other force to bring about the realization, in most countries, of wide State controls over the functioning of the domestic economic systems. State control over the economy had become extensive during the First World War. But, at the end of the con flict, most people, in most countries, had shown a desire to see less of that. The transnational behaviour of the U.S. banks in the twen ties, and the world chaos and depression which it caused, rendered the possibility of a return to laisser faire totally anachronistic and legitimized Keynesianism in England, the New Deal in the U.S. and the totalitarian control of the economy in Germany, Italy and Japan. As a result of the world crisis, Mussolini switched from liberalism, which had characterized his first decade in power, to more and more intense dirigism and protectionism.
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-In the United States, as well as in other industrial countries, laws were passed in the 1930s to reform the banking system which were uniformly inspired by the consciousness that banks, if left to behave freely, would sooner or later induce a financial crisis and would have to be rescued, as they had been at the beginning of the 1930s. This possibility was exorcised by extensive banking regulation, which reached its acme in the United States. It is worth noting that the only country where financial institutions escaped regulation in the 1930s was Great Britain. This is another example of the City's masterly control of British politics. All the critics of banks in Britain got in the 1930s was the Macmillan Report, which anyway ended up by attributing torts to both banks and industry.
2. The banking reforms of the Roosevelt years effectively segmented the United States financial market and left the large "money center" banks without much prospect for growth. Ironically, the only field that remained open to them to plough was that of foreign operations, which was the one where their actions had been most destabilising for
the world economy. Throughout the second half of the 1930s, and the war years, the U.S. large banks experienced an enormous inflow of
foreign deposits, owned by people who fled a Europe ridden by war and totalitarian regimes. This helped the large U.S. banks considerably, as they had been effectively cut off from the U.S. inter-bank deposit market by the flood of war-bonds floated by the U.S. Government to finance the War, which were absorbed by provincial banks and other financial institutions.
At the end of the War, foreign operations being the only growth prospect open to U.S. large banks, they had to make sure that the world financial system would be reconstructed in a way that made
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-the realization of those prospects possible. U.S. large banks thus fought a stubborn and in the end successful battle against people like Keynes and Harry Dexter White, who had very different plans for the world financial system.
They sought to reorganize the latter according to a clear model of international financial relations, where private short-term capital movements could be free to help, but prevented from harming the growth of national economies. The original Keynes and White plans had pro visions for full control of unwanted capital flows.
The final plan for the establishment of the International Mone tary Fund, however, after the U.S. banks had exercised their influ ence, turned out to be very different. There was in it no clause compelling receiving countries to return short-term capital flows to the countries whence they came. There was no provision for an inter national Central Bank, which would be able to create public interna tional liquidity and distribute it among countries. Thus, with the darkening of detente prospects in Europe and the start of the cold war, a new flood of money invaded the U.S. directed mainly to the large banks, of course, as Europeans tried to remove at least their money from countries which could become communist any day. The Marshall Plan was launched to balance this flow with one in the opposite direction. The same result, of course, would have been obtained if the appropriate clauses contained in the Keynes and White Plans had been maintained. But those would have put an automatic system into action whereby the funds would simply be returned to the countries of origin. The Marshall Plan was, on the contrary, a system of aid, tied to the purchase of U.S. made goods. It was an immensely successful operation, which had a huge propaganda effect in Europe, helped U.S. industry and agriculture and solved the world's payments problem in those crucial years.
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-Thus a compromise was found by which the foreign economic policy of the U.S. could be kept within the international model and U.S. large banks were left free to manage their transnational model of foreign financial operations.
The powerful drive to increase foreign operations came to large U.S. banks from the static situation of the U.S. domestic money mar ket. Large banks are the principal source of credit of large U.S. corporations, and, like other large banks in the main industrial
countries, can usually lend more than they are able to get as deposits from the public through their branch network. The huge presence of U.S. Government bonds and the banking reforms of the Roosevelt years prevented them, however, from making up their deficit of loanable funds on the U.S. interbank market. The stifling regulatory envi ronment also prevented them from competing for funds by bidding up the deposit rate they gave their customers.
While in the late 1930s, 1940s and early 1950s, foreign deposits had been an extremely important source of loanable funds for large U.S. banks, this source dried up with political and economic stabi
lization in Europe. The main source of dynamism then becomes, in the early 1960s, the enormous wave of U.S. investments abroad, which had Europe as its centre.
We have now almost forgotten that the late 1950s and early 60s were in the United States years of industrial maturity and stagnation. The phase of growth based on automobiles, motorways, and consumer durables had come to its limit. With the dollar remaining high valued, but every day nearer to a devaluation, with a progressive government coming into power under John Kennedy, there were powerful incentives for U.S. capital to emigrate, especially to Europe. There, markets were ready for automobiles and consumer durables, and invest ment was cheap.
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-American large banks were ready to follow large U.S. corporations in their drive to multinationalize. A renewed battle for market
shares soon broke out as large banks competed for those corporations' international deposits. Both banks and multinational corporations soon discovered that a very lucrative game could be played, by engaging in one-way speculation against currencies which were tied to parities fixed under the Bretton Woods system. Central banks had to defend these parities, and speculators could not lose.
The Kennedy-Johnson years were thus characterized by massive mi gration of American capital abroad, and by repeated and powerful at tacks against the dollar parity, mounted by the treasurers of American multinationals with the indispensable help of the large American
banks. So powerful were those speculative attacks that they induced a series of measures by the American Government, aimed at restricting the freedom of capital movements. These measures however, were
adopted always trying to get the highest possible measure of approval from bankers, i.e., from the very people against whom they should have been aimed. They inevitably achieved results which provided no solu tion to the problem, but only managed to shift the problem itself to another dimension.
I shall analyse one of the most important examples of this beha viour in one minute. Before that, however, it is worth pausing to ask why the U.S. Government acted so feebly. The most obvious answer is
that large banks and multinational corporations are powerful pressure groups, whose open enmity cannot be endured for too long even by an Administration with massive popular backing. But there is another answer. The Government of the United States, like that of other large industrial countries, has got used to furthering its foreign policy objectives through the actions of large banks and multinationals. The Government, that is to say, strives to work with a traditional
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-national model of foreign relations by demanding, from time to time, that those transnational actors, large banks and corporations, adopt certain types of behaviour, which help the American foreign policy stance vis-à-vis certain countries. If the Government adopted at the same time measures directly punitive towards large banks and companies it could not ask them to help the conduct of American foreign policy by their collaborative action. Hence the inconsistent behaviour of the Democratic Administrations with respect to the problem of inter national financial speculation.
A good example of this inconsistency is provided by the Voluntary Credit Restraint Program, adopted in 1965. This constrained foreign lending from the home offices of U.S. banks. Up to then U.S. banks had lent abroad directly from the U.S., thus posing increasing pro blems for the U.S. balance of payments. As a result of the V.C.R. program, banks were allowed to lend abroad funds which they had acquired through their foreign branches.
After the Suez crisis of 1956, British banks had been subjected to similar constraints. However, the restrictions extended to all financing of non-British customers with sterling denominated loans. British banks had reacted by attracting dollar-denominated foreign deposits, thus giving impetus to the Euro-dollar market.
The American VCR program, however, did not prevent American banks from lending abroad in dollars. It only prevented them from lending abroad from their U.S. balance sheets. As a result, American banks began a massive drive to open foreign branches. In some cases these were genuine foreign branches, collecting genuine foreign dollar
deposits. But in a large number of cases the opening of a foreign branch only meant that the home office of an American bank would open a "shell" in an offshore centre, like the Bahamas, and start a Bahamas
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-balance sheet in New York. On the liability side of this balance sheet the bank would put all deposits it received from sources outside the U.S., on the asset side it would put loans and other investments. Thus the bank would run in New York two balance sheets, side by side. One, of its U.S. operations, subject to U.S. banking regulations and to U.S. taxes. The other, of its "Bahamas opera tions", subject only to Bahamas fiscal, legal and banking require ments, which were very close to non-existence.
By the VCR program, the U.S. Government had thus renounced its sovereignty on a large share of total financial transactions taking place in New York and other U.S. money centres and involving mostly, if not exclusively, American citizens and American Banks.
This solution, moreover, not only posed sovereignty problems. It also did not facilitate the conduct of U.S. monetary policy. In 1969, for instance, when the U.S. Government tried to stem the inflationary impact of the Vietnam War on the U.S. economy by a restrictive mone tary policy, U.S. banks reacted by borrowing massively from their "foreign" balance sheets. There were, in fact, no rules to prevent banks from borrowing from their "foreign" offices.
Thus, about 14 billion dollars were passed from the foreign to the domestic balance sheets of U.S. large banks and lent to large U.S. corporations. This prolonged the tight money period in the U.S., as the Fed had to depress housing and other sectors in order to balance the refusal by large corporations to accept the credit squeeze in the way we have mentioned. The Fed tried to remedy the situation by imposing a 10% marginal reserve requirement on additional borrowing from foreign branches. But it also recognised that the large banks had enjoyed an unfair advantage and allowed more and more U.S. banks
to open "shell" branches.
»
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-The year after, 1970, the American credit market slumped and large funds were shifted back to the "foreign" balance sheets of U.S. banks. Those funds were used to speculate against the dollar, as foreign banks borrowed Euro-dollars from U.S. banks' "foreign" branches and transformed them into other currencies. As is known, under the pressure of these speculative attacks, the dollar was devalued in 1971. Most large industrial countries then decided to impose exchange restrictions. But those restrictions were easily by-passed. The foreign branches of U.S. banks borrowed foreign currency deposits in the international inter-bank market, which was not subject to exchange controls, and re-loaned the funds to specu lators who could not acquire the funds directly from European banks. They also swapped balances for customers who could not get funds out of their countries, and helped those customers who could not get funds into their countries by selling deposits to the domestic inter-bank market or by acquiring deposits from domestic banks. As a result, dollars again flowed into the coffers of European Central Banks, in spite of their exchange controls. The dollar had again to be devalued, under the pressure of speculation, in 1973.
In 1973 there was a real explosion of the foreign branch ac tivities of U.S. banks. Their assets rose by 56% while the number of foreign banks, finance, and leasing affiliates owned by U.S. banks rose from 416 in 1971 to 1670 companies in 1973.
This-over extension could not fail to have traumatic effects. These occurred in 1974 with the secondary banking crisis in Great Britain, the Herstatt and Franklin National Bank failures in Germany and in the United States.
In the U.S. recession of 1975, $20 billion were again shifted from the "home" to "foreign" balance sheets of U.S. banks.
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-This prevented U.S. interest rates from falling and prolonged the U.S. recession. It also undoubtedly strengthened the downward pressure on the dollar exchange rate. Where did the money go this time? It went to solve the balance of payments problems of countries which were struggling with giant oil deficits.
3. The drive to transnational banking I have sketched above started in the United States as a way for the largest U.S. banks of getting round very dim growth prospects at home. As a result of the excesses of the 1920s, to which I have also referred above, in the 1930s, ex tensive regulation of banking took place in the major industrial
countries and particularly in the U.S. Regulation was so devised as to considerably restrict the field of domestic operations of large banks, particularly of U.S. large banks. Ironically, the only field where they were left free to expand was the international field and large banks were busy, even in the late 30s, attracting foreign deposits. They were also extremely interested, and successful, in making sure that the world financial system be rebuilt in a way which would permit transnational financial operations to take place on a large scale. The alternative model of rebuilding the world financial system ac cording to a purely international model of financial relations, sponsored by Keynes and White, was discarded.
As the long post-war boom extended from the midfifties into the sixties and early seventies, large banks all over the developed world were induced, with the help of national authorities, to expand their
transnational operations.
The international inter-bank market, for instance, was developed, in the early sixties, to dump dollars which European countries saw
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-accumulating in their official reserves in the long era of dollar semi-inconvertibility, which lasted over a decade. Large European and Japanese banks were given very attractive swap contracts by their central banks, so that they could dump dollars on the interbank market without running the currency risk, which was picked up by the Central banks. Foreign operations of large banks were also favoured by Euro pean and Japanese authorities as a way to return to large banks part of the competitive edge taken away by restrictive banking regulation.
Regulation had, in fact, diminished the large banks' capacity to grow, but the long post-war boom had induced the fast growth of large industrial corporations, the traditional clients of large banks. Industrial giants like Siemens, G.M., Mitsubishi, Fiat, Saint Gobain, could not solve the problem by getting the finance, which they needed to operate, from smaller banks. This could be done to some extent, but industrial credit on a large scale can only efficiently come from large banks. The problem of the relative size of lender and borrower is just one of the problems involved.
As a result, as I have mentioned above, the growth of trans national banking was favoured by national authorities, who, at the same time, however, started to become more and more painfully aware of the loss of control and stability for world economic relations that this involved.
With a decade of dollar devaluation, in the 1970s, the trans national operations of non-American large banks were naturally fa voured. European and Japanese banking is a very concentrated busi ness, and the strength of those countries' currencies added compe titive power to these giants in the transnational market. Today, the relative share of the total transnational banking market held by U.S. banks is much smaller than what it was 15 years ago. But, since we
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-are speaking of a very small total number of giant banks, this loss of relative weight on the part of U.S. banks has decreased, rather than increased, the relative stability of the world financial system. It has meant that the powers of the Federal Reserve to control the market have decreased, and that, at the same time, the free-riding tendencies of the largest corporations, and of American banks in particular, have increased. The market has become too large for any one Central bank to control it just by disciplining its own national banks. At the same time, the dollar component of the market has increased rather than declined because of the new strength of the dollar in the 1980s. Thus, while the Fed is too small to control the market, other central banks do not have the liquidity creating capacity that is required to do so, as each currency other than the dollar represents only a small part of the market. However, since such a large portion of the market is in dollars, American domestic economic and financial events exer cise a disproportionate influence over it, and since economic policy making in the U.S. has acquired a highly uncertain and oscillatory nature, these oscillations reberberate through the transnational financial market with effects which cannot but frighten the observer.
The increasing heterogeneity of transnational finance also leads to highly differentiated behaviour. American large banks, facing a very competitive environment at home, and the perpetual need to look after their shares performance on Wall Street by showing good balance sheets every quarter, tend to behave very differently from continental European banks, which do not have such problems. Since international lending has become very regionalised, with U.S. banks specializing in Latin American loans and German banks in Eastern Bloc loans, while Japanese banks prevail on the Pacific Basin, the behaviour of the banks of the leading regional nation prevails in the management of loans to that region. In the Polish debt crisis for instance, German banks conducted the negotiations with the aim of not forcing Poland
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-into a desperate corner. They were allowed by German Law to make almost unlimited, tax deductible provisions for those debts, and they had to protect an enormous flow of German trade to Eastern Europe. German share holders, moreover, traditionally react in a very positive way to a bank making itself as strong as possible, as they are less dividend minded than the institutional investors who prevail in the U.S. As a result, and in spite of the more militant stand taken by U.S. banks, the Polish debt crisis, and in general the Eastern Euro pean debt crisis, has been very effectively defused. German prestige in the area has consequently risen so high that it has taken the com bined efforts of the Soviet Union and of the United States to prevent a very remarkable rapprochement between Germany, the GDR, Bulgaria, Roumania and Hungary.
Things have been very different in Latin America, where U.S. and British banks lead traditionally. In this area we have noticed a much tougher stand being taken by creditors. European and Japanese banks have tended here to toe the line set by U.S. banks. This tougher
stance must be seen in the context of the domestic American banking situation. U.S. main lenders to Latin America are four or five large U.S. banks, and some of them are very keen to unblock funds to invest them in the U.S. consumer credit market, where recent deregulation has increased their competitive powers. In addition, and this is a
consideration of general value, recent and not so recent events, like the troubles of Franklin National, Chrysler, Continental Illinois, have shown in the last ten years that if the troubles of a company are
large enough, and the company is large enough that its failure would disturb the U.S. financial market, the American authorities will go to the rescue, and use public money to solve private problems. But these rescue operations cannot be programmed. They have to take place at
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-the last minute, just before -the situation becomes explosive, o-ther wise the U.S. public might not be frightened and agree to the use of vast sums of public money which are involved.
Of course, going every time t£ the edge involves the risk that one may eventually go over the edge. But these are the very risks involved in extensive transnationalization of international financial relations. It carries with it the problem that microeconomic beha viour, perverted by the hope of being rescued if real distress occurs, will induce imbalances too serious for the system to bear without breaking up.
Since these considerations are made not only by a humble econo mist like me, but also by the financial authorities of Europe and Japan, and by a number of influential law-makers, economists and
financiers in the U.S., one can very clearly detect a rather desperate attempt to revert from the transnational model of financial relations to the international one to as wide an extent as possible and before a conflagration of major dimension occurs.
If this conflagration, however, occurs, the transition to the international model will be immediate and total.
These are the reasons why I said at the start that I think the pendulum will swing back to international relations. It was an
Italian, Giovanbattista Vico, who invented cyclical history. You will allow an infinitely humbler Italian to walk in his giant shadow.
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f WORKING PAPERS ECONOMICS DEPARTMENT
No. 1: Jacques PELKMANS The European Community and the Newly Industrialized Countries
No. 3: Aldo RUSTICHINI Seasonality in Eurodollar Interest Rates
No. 9: Manfred E. STREIT Information Processing in Futures Markets. An Essay on the Adequacy
of an Abstraction.
No. 10: Kumaraswamy VELUPILLAI When Workers Save and Invest: Some Kaldorian Dynamics
No. 11: Kumaraswamy VELUPILLAI A Neo-Cambridge Model of Income Distribution and Unemployment No. 12: Kumaraswamy VELUPILLAI
Guglielmo CHIODI
On Lindahl's Theory of Distribution
No. 22: Don PATINKIN Paul A. Samuelson on Monetary Theory No. 23: Marcello DE CECCO Inflation and Structural Change in
the Euro-Dollar Market
No. 24: Marcello DE CECCO The Vicious/Virtuous Circle Debate in the '20s and the '70s
No. 25: Manfred E. STREIT Modelling, Managing and Monitoring Futures Trading: Frontiers of Analytical Inquiry
No. 26: Domenico Mario NUTI Economic Crisis in Eastern Europe: Prospects and Repercussions
No. 34: Jean-Paul FITOUSSI Modern Macroeconomic Theory; an Overview
No. 35: Richard M. GOODWIN Kumaraswamy VELUPILLAI
Economic Systems and their Regu lation
No. 46: Alessandra VENTURINI Is the Bargaining Theory Still an Effective Framework of Analysis for Strike Patterns in Europe? No. 47: Richard M. GOODWIN Schumpeter: The Man I Knew No. 48: Jean-Paul FITOUSSI
Daniel SZPIRO
Politique de l'Emploi et Reduction de la Durée du Travail
No. 56: Bere RUSTEM
Kumaraswamy VELUPILLAI
Preferences in Policy Optimization and Optimal Economie Policy
No. 60: Jean-Paul FITOUSSI Adjusting to Competitive Depression. The Case of the Reduction in Working Time
No. 64: Marcello DE CECCO Italian Monetary Policy in the 1980s
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-No. 65: Gianpaolo ROSSINI Intra-industry Trade in Two areas: Some Aspects of Trade Within and Outside a Custom Union
No. 66: Wolfgang GEBAUER Euromarkets and Monetary Control: The Deutschmark Case
No. 67: Gerd WEINRICH On the Theory of Effective Demand under Stochastic Rationing
No. 68: Saul ESTRIN Derek C. JONES
The Effects of Worker Participation upon Productivity in French Pro ducer Cooperatives
No. 69: Bere RUSTEM
Kumaraswamy VELUPILLAI
On the Formalization of Political Preferences: A Contribution to the Frischian Scheme
No. 72: Wolfgang GEBAUER Inflation and Interest: the Fisher Theorem Revisited
No. 75: Sheila A. CHAPMAN Eastern Hard Currency Debt 1970- 1983. An Overview.
No. 90: Will BARTLETT Unemployment, Migration and In dustrialization in Yugoslavia,
1958-1982
No. 91: Wolfgang GEBAUER Kondratieff's Long Waves No. 92: Elisabeth DE GELLINCK
Paul A. GEROSKI Alexis JACQUEMIN
Inter-Industry and Inter-Temporal Variations in the Effect of Trade on Industry Performance
84/103: Marcello DE CECCO The International Debt Problem in the Interwar Period
84/105: Derek C. JONES The Economic Performance of Pro ducer Cooperatives within Command Economies: Evidence for the Case of Poland
84/111: Jean-Paul FITOUSSI Kumaraswamy VELUPILLAI
A Non-Linear Model of Fluctuations in Output in a Mixed Economy
84/113: Domenico Mario NUTI Mergers and Disequilibrium in Labour- Managed Economies
84/114: Saul ESTRIN Jan SVEJNAR
Explanations of Earnings in Yugoslavia: the Capital and Labor Schools Compared 84/116: Reinhard JOHN On the Weak Axiom of Revealed Preference
Without Demand Continuity Assumptions
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84/118: Pierre DEHEZ
84/119: Domenico Mario NUTI
84/120: Marcello DE CECCO 84/121: Marcello DE CECCO
84/122: Marcello DE CECCO
Monopolistic Equilibrium and Involuntary Unemployment
Economic and Financial Evaluation of Investment Projects: General Principles and E.C. Procedures
Monetary Theory and Roman History
International and Transnational Financial Relations
Modes of Financial Development: American Banking Dynamics and World Financial Crises
3
-Spare copies of these Working Papers can be obtained from: Secretariat Economics Department
European University Institute Badia Fiesolana
50016 S. Domenico di Fiesole (Fi) Italy
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EUI Working Papers are published and distributed by the European University Institute, Florence.
Copies can be obtained free of charge — depending on the availability
of stocks — from:
The Publications Officer European University Institute
Badia Fiesolana
1-50016 San Domenico di Fiesole(FI) Italy
Please use order form overleaf
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PUBLICATIONS OF THE EUROPEAN UNIVERSITY INSTITUTE 11/84
To :The Publications Officer
European University Institute Badia Fiesolana
1-50016 San Domenico di Fiesole(FI) Italy
From : Name... . Address...
Please send me the following EUI Working Paper(s):
N o . : ... Author, title:... Date: Signature:
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PUBLICATIONS OF THE EUROPEAN UNIVERSITY INSTITUTE EUI WORKING PAPERS
1: Jacques PELKMANS The European Community and the Newly Industrialized Countries
2: Joseph H.H. WEILER Supranationalism Revisited - Retrospective and Prospective. The European Communities After Thirty Years
3: Aldo RUSTICHINI Seasonality in Eurodollar Interest Rates
4: Mauro CAPPELLETTI/ David GOLAY
Judicial Review, Transnational and Federal: Impact on Integration
5: Leonard GLESKE The European Monetary System: Present Situation and Future Prospects
6: Manfred HINZ Massenkult und Todessymbolik in der national-sozialistischen Architektur 7: Wilhelm BURKLIN The "Greens" and the "New Politics":
Goodbye to the Three-Party System? 8: Athanasios MOULAKIS Unilateralism or the Shadow of
Confusion
9: Manfred E. STREIT Information Processing in Futures Markets. An Essay on the Adequacy of an Abstraction
10:Kumaraswamy VELUPILLAI When Workers Save and Invest: Some Kaldorian Dynamics
11:Kumaraswamy VELUPILLAI A Neo-Cambridge Model of Income Distribution and Unemployment
12:Kumaraswamy VELUPILLAI/ Guglielmo CHIODI
On Lindahl's Theory of Distribution
13:Gunther TEUBNER Reflexive Rationalitaet des Rechts 14:Gunther TEUBNER Substantive and Reflexive Elements in
Modern Law
15:Jens ALBER Some Causes and Consequences of Social Security Expenditure Development in Western Europe, 1949-1977
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2
-PUBLICATIONS OF THE EUROPEAN UNIVERSITY INSTITUTE November 1984
16:Ian BUDGE Democratic Party Government: Formation and Functioning in Twenty-One Countries
17:Hans DAALDER Parties and Political Mobilization: An Initial Mapping
18:Giuseppe DI PALMA Party Government and Democratic Reproducibility: The Dilemma of New Democracies
1 9 :Richard S. KATZ Party Government: A Rationalistic Conception
20:Juerg STEINER Decision Process and Policy Outcome: An Attempt to Conceptualize the Problem at the Cross-National Level 21:Jens ALBER The Emergence of Welfare Classes in
West Germany: Theoretical Perspectives and Empirical Evidence
22:Don PATINKIN Paul A. Samuelson and Monetary Theory 23:Marcello DE CECCO Inflation and Structural Change in the
Euro-Dollar Market
24:Marcello DE CECCO The Vicious/Virtuous Circle Debate in the '20s and the '70s
25:Manfred E. STREIT Modelling, Managing and Monitoring Futures Trading: Frontiers of Analytical Inquiry
26:Domenico Mario NUTI Economic Crisis in Eastern Europe - Prospects and Repercussions
27:Terence C. DAINTITH Legal Analysis of Economic Policy 28:Frank C. CASTLES/
Peter MAIR
Left-Right Political Scales: Some Expert Judgements
29:Karl HOHMANN The Ability of German Political Parties to Resolve the Given Problems: the Situation in 1982
30:Max KAASE The Concept of Political Culture: Its Meaning for Comparative Political Research
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■■ f 3-PUBLICATIONS OF THE EUROPEAN UNIVERSITY INSTITUTE November 1984
31:Klaus TOEPFER Possibilities and Limitations of a Regional Economic Development Policy in the Federal Republic of Germany 32:Ronald INGLEHART The Changing Structure of Political
Cleavages Among West European Elites and Publics
33:Moshe LISSAK Boundaries and Institutional Linkages Between Elites: Some Illustrations from Civil-Military Elites in Israel 34:Jean-Paul FITOUSSI Modern Macroeconomic Theory: An
Overview 35:Richard M. GOODWIN/
Kumaraswamy VELUPILLAI
Economic Systems and their Regulation
36 :Maria MAGUIRE The Growth of Income Maintenance Expenditure in Ireland, 1951-1979
3 7 :G. LOWELL FIELD/ John HIGLEY
The States of National Elites and the Stability of Political Institutions in 81 Nations, 1950-1982
38:Dietrich HERZOG New Protest Elites in the Political System of West Berlin: The Eclipse of Consensus?
39:Edward 0. LAUMANN/ David KNOKE
A Framework for Concatenated Event Analysis
40:Gwen MOOR/ Richard D. ALBA
Class and Prestige Origins in the American Elite
41: Peter MAIR Issue-Dimensions and Party Strategies in the Irish republic, 1948-1981: The Evidence of Manifestos
42:Joseph H.H. WEILER Israel and the Creation of a Palestine State. The Art of the Impossible and the Possible
43:Franz Urban PAPPI Boundary Specification and Structural Models of Elite Systems: Social Circles Revisited
44:Thomas GAWRON/ Ralf ROGOWSKI
Zur Implementation von
Gerichtsurteilen. Hypothesen zu den Wirkungsbedingungen von Entscheidungen des Bundesverfassungsgerichts
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PUBLICATIONS OF THE EUROPEAN UNIVERSITY INSTITUTE November 1984
45:Alexis PAULY/ René DIEDERICH
Migrant Workers and Civil Liberties
46:Alessandra VENTURINI Is the Bargaining Theory Still an Effective Framework of Analysis for Strike Patterns in Europe?
47:Richard A. GOODWIN Schumpeter: The Man I Knew 48 :J .P . FITOUSSI/
Daniel SZPIRO
Politique de l'Emploi et Réduction de la Durée du Travail
49:Bruno DE WITTE Retour à Costa. La Primauté du Droit Communautaire à la Lumière du Droit International
50:Massimo A. BENEDETTELLI Eguaglianza e Libera Circolazione dei Lavoratori: Principio di Eguaglianza e Divieti di Discriminazione nella Giurisprudenza Comunitaria in Materia di Diritti di Mobilità Territoriale e Professionale dei Lavoratori
51:Gunther TEUBNER Corporate Responsability as a Problem of Company Constitution
52:Erich SCHANZE Potentials and Limits of Economic Analysis: The Constitution of the Firm 53:Maurizio COTTA Career and Recruitment Patterns of
Italian Legislators. A Contribution of the Understanding of a Polarized System
54:Mattei DOGAN How to become a Cabinet Minister in Italy: Unwritten Rules of the Political Game
55:Mariano BAENA DEL ALCAZAR/ Narciso PIZARRO
The Structure of the Spanish Power Elite 1939-1979
56:Bere RUSTEM/
Kumaraswamy VELUPILLAI
Preferences in Policy Optimization and Optimal Economic Policy
57:Giorgio FREDDI Bureaucratic Rationalities and the Prospect for Party Government
59:Christopher Hill/ James MAYALL
The Sanctions Problem: International and European Perspectives
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-PUBLICATIONS OF THE EUROPEAN UNIVERSITY INSTITUTE November 1984
60:Jean-Paul FITOUSSI Adjusting to Competitive Depression. The Case of the Reduction in Working Time
61:Philippe LEFORT Idéologie et Morale Bourgeoise de la Famille dans le Ménager de Paris et le Second Libro di Famiglia, de L.B. Alberti
62:Peter BROCKMEIER Die Dichter und das Kritisieren 6 3 :Hans-Martin PAWLOWSKI Law and Social Conflict
64:Marcello DE CECCO Italian Monetary Policy in the 1980s 65:Gianpaolo ROSSINI Intraindustry Trade in Two Areas: Some
Aspects of Trade Within and Outside a Custom Union
6 6 ‘.Wolfgang GEBAUER Euromarkets and Monetary Control : The Deutschemark Case
67:Gerd WEINRICH On the Theory of Effective Demand under Stochastic Rationing
68:Saul ESTRIN/ Derek C. JONES
The Effects of Worker Participation upon Productivity in French Producer Cooperatives
69:Bere RUSTEM
Kumaraswamy VELUPILLAI
On the Formalization of Political Preferences : A Contribution to the Frischian Scheme
70:Werner MAIHOFER Politique et Morale
71:Samuel COHN Five Centuries of Dying in Siena: Comparison with Southern France
72:Wolfgang GEBAUER Inflation and Interest: the Fisher Theorem Revisited
73:Patrick NERHOT Rationalism and the Modern State
7 4 -.Philippe SCHMITTER Democratic Theory and Neo-Corporatist Practice
75:Sheila A. CHAPMAN Eastern Hard Currency Debt 1970-83. An Overview
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6-PUBLICATIONS OF THE EUROPEAN UNIVERSITY INSTITUTE November 1984
76:Richard GRIFFITHS Economic Reconstruction Policy in the Netherlands and its International Consequences, May 1945 - March 1951 77:Scott NEWTON The 1949 Sterling Crisis and British
Policy towards European Integration 78:Giorgio FODOR Why did Europe need a Marshall Plan in
1947?
79:Philippe MIOCHE The Origins of the Monnet Plan: How a Transistory Experiment answered to Deep-Rooted Needs
80:Werner ABELSHAUSER The Economic Policy of Ludwig Erhard 8 1 :Helge PHARO The Domestic and International
Implications of Norwegian Reconstruction
82:Heiner R. ADAMSEN Investitionspolitik in der Bundesrepublik Deutschland 1949-1951 83:Jean BOUVIER Le Plan Monnet et l'Economie Française
1947-1952
84:Mariuccia SALVATI Industrial and Economie Policy in the Italian Reconstruction
85:William DIEBOLD, Jr. Trade and Payments in Western Europe in Historical Perspective: A Personal View by an Interested Party
86:Frances LYNCH French Reconstruction in a European Context
87:Gunther TEUBNER Verrechtlichung. Begriffe, Merkmale, Grenzen, Auswege
88:Maria SPINEDI Les Crimes Internationaux de l'Etat dans les Travaux de Codification de la Responsabilité des Etats Entrepris par les Nations Unies
89:Jelle VISSER Dimensions of Union Growth in Postwar Western Europe
90:Will BARTLETT Unemployment, Migration and
Industrialization in Yugoslavia, 1958- 1977
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PUBLICATIONS OF THE EUROPEAN UNIVERSITY INSTITUTE November 1984
92:Elisabeth DE GHELLINCK/ Paul A. GEROSKI/
Alexis JACQUEMIN
Inter-Industry and Inter-Temporal Variations in the Effect of Trade on Industry Performance
93:Gunther TEUBNER/ Helmut WILLKE
Kontext und Autonomie.
Gesellschaftliche Selbststeuerung durch Reflexives Recht
94:Wolfgang STREECK/ Philippe C. SCHMITTER
Community, Market, State- and Associations. The Prospective
Contribution of Interest Governance to Social Order
95:Nigel GRIFFIN "Virtue Versus Letters": The Society of Jesus 1550-1580 and the Export of an Idea
96:Andreas KUNZ Arbeitsbeziehungen und
Arbeitskonflikte im oeffentlichen
Sektor. Deutschland und
Grossbritannien im Vergleich 1914-1924 97:Wolfgang STREECK Neo-Corporatist Industrial Relations
and the Economic Crisis in West Germany
98:Simon A. HORNER The Isle of Man and the Channel Islands - A Study of their Status under Constitutional, International and European Law
99:Daniel ROCHE Le Monde des Ombres
84/100:Gunther TEUBNER After Legal Instrumentalism?
84/101:Patrick NERHOT Contribution aux Débats sur le Droit Subjectif et le Droit Objectif comme Sources du Droit
84/102:Jelle VISSER The Position of Central Confederations in the National Union Movements
84/103:Marcello DE CECCO The International Debt Problem in the Inter-War Period
84/104:M. Rainer LEPSIUS Sociology in Germany and Austria 1918- 1945. The Emigration of the Social Sciences and its Consequences. The Development of Sociology in Germany after the Second World War, 1945-1967
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PUBLICATIONS OF THE EUROPEAN UNIVERSITY INSTITUTE November 1984
84/105:Derek JONES The Economic Performances of Producer Cooperations within Command Economies: Evidence for the Case of Poland
84/106:Philippe C. SCHMITTER Neo-Corporatism and the State
84/107:Marcos BUSER Der Einfluss der Wirtschaftsverbaende auf Gesetzgebungsprozesse und das Vollzugswesen im Bereich des Umweltschutzes
84/108:Frans van WAAPDEN Bureaucracy around the State:Varieties of Collective Self-Regulation in the Dutch Dairy Industry
84/109:Ruggero RANIERI The Italian Iron and Steel Industry and European Integration
84/110:Peter FARAGO Nachfragemachr und die kollektiven Reaktionen der Nahrungsmittelindustrie 84/111:Jean-Paul FITOUSSI/
Kumuraswamy VELUPILLAI
A Non-Linear Model of Fluctuations in Output in a Mixed Economy
84/112:Anna Elisabetta GALEOTTI Individualism and Political Theory 84/113:Domenico Mario NUTI Mergers and Disequilibrium in Labour-
Managed Economies
84/114:Saul ESTRIN/Jan SVEJNAR Explanations of Earnings in Yugoslavia: The Capital and Labor Schools Compared
84/115:Alan CAWSON/John BALLARD A Bibliography of Corporatism
84/116:Reinhard JOHN On the Weak Axiom of Revealed Preference Without Demand Continuity Assumptions
84/117:Richard T.GRIFFITHS/Frances The FRITALUX/FINEBEL Negotiations
M.B. LYNCH 1949/1950
84/118:Pierre DEHEZ Monopolistic Equilibrium and Involuntary Unemployment
84/119:Domenico Mario NUTI Economic and Financial Evaluation of Investment Projects; General
Principles and E.C. Procedures 84/120:Marcello DE CECCO Monetary Theory and Roman History
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-PUBLICATIONS OF THE EUROPEAN UNIVERSITY INSTITUTE November 1984
84/121:Marcello DE CECCO International and Transnational Financial Relations
84/122:Marcello DE CECCO Modes of Financial Development: American Banking Dynamics and World Financial Crises
84/123:Lionello F. PUNZO/ Kumuraswamy VELUPILLAI
Multisectoral Models and Joint Production
84/124:John FARQUHARSON The Management of Agriculture and Food Supplies in Germany, 1944-47 84/125:Ian HARDEN/Norman LEWIS De-Legalisation in Britain in the
1980s
84/126:John CABLE Employee Participation and Firm Performance. A Prisoners’ Dilemma Framework
84/127:Jesper JESPERSEN Financial Model Building and Financial Multipliers of the Danish Economy
